The lessons of Politico: Someone needs to bankroll the losses of content start-ups

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Interesting piece by Michael Wolff in Vanity Fair on the success of Politico, the US political site launched by three former Washington Post journalists in 2007.

Wolff, as usual, is excellent: he describes Politico as ‘constant, unrelenting, second by second’— a site that ‘exalts, and fetishizes, in breathless, even orgiastic news flashes, the most boring subject in the world: the granular workings of government bureaucracy”.

It’s a credible vision of the future, says Wolff: ‘obsessives everywhere in their particular narrow-focused areas of interest. . . flashing ever more information, ever quicker, in ever shorter bites . . . to all the ships at sea.”

The way in which the site’s founders talk about making the transition from the Washington Post to life in a start-up is striking. It started with a daydream that will be familiar to most journalists — the one about freely-available means of production and distribution. Here’s John Harris describing the original inspiration for the site:

‘If Google wanted to own Washington coverage, well, all it would have to do is take the six or seven journalists who are really producing stuff–remember, reporters don’t make shit–and put them in one place and overnight Google would own Washington.”

‘Well, why couldn’t we do that? With a small group of the best–six of the best, and then six in their 20s with all the right moves–on day one we could compete with the New York Times Washington bureau or Washington Post national desk.”

One day? Politico started competing with established rivals during the 2008 election campaign: it hasn’t looked back. The site now has an editorial staff of 75, including eight reporters stationed at the White House (more than any other news organisation).

The finances are intriguing, too. As Wolff notes, the lobbyists who advertise on Politico pay higher CPMs than most digital advertisers. They do so to reach 6.7 monthly unique users.

Politico also has a 32,000 print edition, distributed for free in Washington D.C. three times a week when Congress is in session.

According to Wolff, digital and print each contribute half of Politico’s $15.9m turnover. Politico is paying its reporters ‘at nearly the level’of the Washington Post. Even so, break-even is looming.

One thing goes unmentioned in Wolff’s account: the losses that undoubtedly piled up in years one and two. Were they $10m or $20m? Perhaps even $30m. Either way, they were tolerated by the man who bankrolled Politico: 40-year-old Robert Allbritton, scion of the publishing family that once owned The Washington Star.

The means of production of distribution might be free or freely available. But lots of content-based start-ups die because they don’t possess sufficient capital to get through years 1-3. Talent counts for a lot, but it’s not quite everything.